Font Size
    • Share to Facebook
    • Twitter
    • Email
    • Print
How Social Security is Financed

Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $118,500 (in 2016), while the self-employed pay 12.4 percent.

In 2014, $756 billion (85.5 percent) of total income for the Old-Age, Survivors and Disability Insurance (OASDI) program came from payroll taxes. The remainder was provided by interest earnings ($98.2 billion or 11 percent) and revenue from taxation of OASDI benefits ($29.6 billion or 3 percent).  About $500 million (0.1 percent) in reimbursements from the General Fund of the Treasury were transferred to the trust funds in 2014.

The payroll tax rates are set by law and apply to earnings up to the taxable maximum. This amount, called the earnings base, rises as average wages increase.  The following table reflects the portion of the tax rate that is dedicated to the OASI and the DI Trust Funds. 

                                    Share of the Tax Rate for Each Trust Fund

Year

OASI

DI

OASDI

2016 through 2018

2019 and later

5.015

5.30

1.185

0.90

6.20

6.20

SOURCE: The Bipartisan Budget Act of 2015 and the 2015 OASDI Trustees Report.

 

                                                                        Government Relations and Policy, March 2016



   

Subscribe e-Alerts

Sign up to receive National Committee updates on Social Security and Medicare.

Read Our Blog

Scrapping the Cap: National Committee endorses Bernie’s new Social Security Bill; Marks the Day Millionaires Stop Paying Payroll Taxes.

Senator Bernie Sanders and Rep. Peter DeFazio introduced landmark legislation yesterday to keep Social Security solvent for the next six decades --- without cutting anyone’s benefits. The National Committee endorses the bill, titled the Social Security Expansion Act, introduced on the day when the average millionaire reaches the payroll tax income cap of $127,000 per year.

Read More




 

            

 

Copyright © 2017 by NCPSSM
Login  |